The bulls can't get enough of Newfield Exploration.
optionMONSTER's Heat Seeker monitoring system has shown a steady
flow of upside activity in the oil company, which is attempting to
lift itself from a three-year selloff. Investors have reaped rich
rewards from the name, and are coming back for more today.
This time, a trader sold 6,000 November 27 puts for $1.40 and
bought an equal number of October 28 calls for $0.50. He or she
collected $0.90 in the process.
The investor now stands to profit from a rally over the next three
weeks and has agreed to be buy NFX for $27 if it closes below that
level on November expiration one month later. Overall, the trade
reflects a belief that downside risk is minimal and the shares are
likely to rise.
NFX is up 0.11 percent to $27.41 in morning trading, reversing
earlier losses. The stock has climbed 15 percent in the last month,
making it the best-performing energy name in the S&P 500 during
that time. On a year-to-date basis, however, it's the second worst,
according to our
The company has been regaining favor recently as management focuses
on North American oil production and shifts away from overseas
Today's bullish strategy combines put selling with long calls but
is unusual because it employs different expiration months. (See our
section for the myriad ways calls and puts can be mixed to achieve
your trading objectives.)
Total option volume is triple the daily average so far in the
session, according to the Heat Seeker.
I own NFX shares.